I've written about Brazil pre-Lula and post-Lula and spent the last five years covering all aspects of the country for Dow Jones, Wall Street Journal and Barron's. Meanwhile, for an undetermined amount of time, and with a little help from my friends, I will be parachuting primarily into Brazil, Russia, India and China. But will also be on the look out for interesting business stories and investing ideas throughout the emerging markets.

China Ready To Take On Boeing, Airbus

It was only a matter of time. And while it may take another decade before it poses any competitive threat in Asia, the state-owned Commercial Aircraft Corp of China (Comac) is building regional jets for the booming local market. That makes Boeing and Airbus the prime targets.

For now, the C919 operates within the 158-174 seat range, making it a direct competitor to mid-sized Airbus lines like the A320 and smaller Boeing 737s. The company said it has order interest from Ryanair, an Irish client that also flies 737s. Comac did not provide pricing details.

The C919 is China’s first major foray into the commercial airliner business, following the failed Shanghai Y-10 by the defunct Shanghai Aircraft Manufacturing Company over 30 years ago. The Y-10 never flew commercial. China’s latest narrow body passenger plane will take its first flight in 2015, with first deliveries to Chinese airlines planned in 2016.

Tian declined to disclose prices for the C919 but said it would be competitive with rival models, such as the Airbus A320 and the Boeing 737.

The C919 can seat up to 168 people, with a flying range of up to 5,555 kilometers. That range means it cannot fly on popular routes such as those to the US and Western Europe.

China’s travel market is growing as incomes rise. Demand from national tourism alone requires an additional 5,580 commercial aircraft over the next 20 years, according to Boeing’s own estimate.

“We want to develop our business in the domestic market first, and then gradually move into the international market,” Tian Min, Comac’s CFO, told Shanghai Daily on Thursday.

The C919 has a flying range of up to 5,555 kilometers, meaning it cannot fly on China’s preferred international routes to the U.S. and Western Europe. Min announced the order interest for 400 aircraft to the press in Shanghai on Thursday.

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It won’t be competitive with the 737 max or the A320 NEO. Comac had to give up on key technologies in order to try to get it into production. The 737 and A320(and related planes) can carry various numbers of passengers with stretched fuselages.

I think it will take a long time for the EASA and the FAA to certify this since the company and the aircraft will be completely new. My understanding is that Ryanair has a Memorandum of Understanding with Comac, but has not made firm orders. If that is true orders could easily be cancelled or pushed back. Once the airplanes are certified Comac has to show that it can produce them in the numbers it wants to and not deliver them far behind schedule. This is also new for Comac. At the Paris airshow in June of last year Ryanair finalized orders on 175 Boeings. I do not know whether customers would be willing to ride on airplanes from a new Chinese manufacturer when they have well proven planes in the 737 and A320.

Airplanes, airlines, and airports are very sexy investments for business people, but they are often unprofitable (this is very true of the airline industry in China over the last couple decades)

China might want to produce a plane even if it is unprofitable because of the overall improvement in domestic tecnology it may receive. It could use that in future planes and in the military.

It also boosts the image of China as a major power.

I don’t think the tube with wings design of airplanes will last much beyond the 777x, 787, and 737 max because blended wing bodies are so much more efficient.

I think there is a danger that China is investing in technology that is in the Autumn of its life.

Me either. But China wants to build big things. Has a lot of mouths to feed. Whether they get it right or wrong, who cares? By the time they figure it out, the would have employed another 20,000 people. And I guess Air China can keep Comac busy for a while, too.